At this time, the only definitive treatment of hepatic failure is transplantation of the liver. One way to overcome the technical difficulties and risks of liver transplantation is to transplant isolated hepatocytes. It is not clear, however, how an adequate number of human hepatocytes might be obtained given the severely limited supply of human donor livers available. Given the shortage of donor livers and, by extension, human hepatocytes available to treat acute and chronic liver failure, our laboratory has explored embryonic stem (ES) cells as a potential replacement source of donor hepatocytes. Embryonic stem cells are pluripotent, can be propagated indefinitely as undifferentiated cells with a normal karyotype, can be induced to differentiate in vitro into various cell types, and are capable, under appropriate conditions, of complete fetal and adult development in vivo. In Preliminary Studies, we have differentiated mouse ES cells with metabolic activity and in vitro synthetic liver function approximating that of primary hepatocytes, but have not assessed their full capacity to correct deficiencies of liver function by transplantation. We have also differentiated human ES cells to express liver-specific genes, secrete albumin, and have metabolic activity consistent with liver function, but not to the same degree as we have accomplished with mouse ES cells. The specific aims of this proposal are: 1) to test the hypothesis that ES-derived hepatocytes can mature into fully functional liver parenchymal cells upon transplantation in animals with liver dysfunction; 2) to test whether protocols successfully used to differentiate mouse ES cells toward a hepatocyte phenotype will be effective in differentiation of human ES cells, which will respond to soluble and local matrix-related hepatic and embryonic signals to undergo hepatic differentiation; 3) to test whether in vitro differentiation and lineage- specific isolation of mES- and hES- derived hepatocytes will reduce their potential for teratoma development, and thus make them safer for clinical use. ES cell-derived human hepatocytes could be used to repopulate the livers of immune incompetent mice, facilitating the study of human hepatitis virus infection and human drug metabolism, and to develop bio-artificial extracorporeal liver support devices. [unreadable] [unreadable] [unreadable]